New economic research, data, events and analysis from a London-based economist

Thursday, November 22, 2007

Hefei: China's Silicon Valley?

The December 2007 issue of Prospect magazine has an article by Rob Gifford about Hefei. Almost unknown outside China, it aspires to be The Silicon Valley of China. Here's the first pargraph:

In the US, there are nine cities with more than 1m inhabitants. In
China, there are 49. You can be travelling across China, arrive in a
city that is twice the size of Houston, and think: I've never even
heard of this place. That is how it is for many foreign visitors to
Hefei (population 4.7m). I have been travelling to China as a
journalist, or living here, for nearly 20 years and visited Hefei
(pronounced Huh-fay) for the first time only last year for the book I
have just written about the new China. There had never been any reason
to come. But as in so many cities in China, the local government is
trying to change that. After centuries of inland poverty, Hefei, like
all Chinese cities, is opening up.

Gifford concludes his piece with some interesting comparisons betwen India and China:

In India, the cost of some restraint on the government is a slower
growth rate. But at least independent trade unions are allowed in
India, and some of them have teeth. India also has a free press, which
can act as a watchdog on governmental bad behaviour. In China, the
press is more free now on social and economic matters, but it can
easily be muzzled by the government on any sensitive issue.

In the end though, there is one crucial difference between China and
India, and a perfect example of it is coated in black tarmac and runs
east and west through Hefei. China is a brutal place to live if you are
on the bottom rung, but there is an exit. And, just as important, there
is a real possibility of a job at the other end. India's 1.1bn
population is rapidly catching up with China's 1.3bn.

But India has
only about 10m manufacturing jobs, compared with about 150m in China.
So there are simply more opportunities in China to improve your life.
(And I haven't even mentioned India's restrictive caste system.) The
growing service sector in India—in software development, in call
centres and service centres—is great if you are already middle class
and speak English. But what about possibilities for the hundreds of
millions of illiterate peasants? It seems to me that India is trying to
reach modernism without passing through the industrial revolution.

Now, as the cost of manufacturing rises in China, we are starting to
see some manufacturing relocating to India. The country's retail sector
is opening up too, and India is in the midst of other major economic
changes. So in the near future, more opportunities of escape from rural
poverty may be provided, in which case the balance will tip in India's
favour.

I'm disappointed that one of the few Indians in central China does not
want to have this conversation with me. So in the end, I have the
conversation with myself over dinner, and I conclude that I do not want
to be a Chinese peasant or an Indian peasant. But if I have to take a
side, despite all the massive problems of rural China, I'll go for the
sweet and sour pork over the chicken biryani.

Comments

Hmmm.. I do agree with you in many parts but will have to think about it deeply. But have to say that it is quite well put though and did make me reassess many of my ideas about certain things. Many thanks for giving this different perspective.

As millions of people who want to lose weight, but youDid he can not succeed in a kind of worry about your weight yanıyorsunuz more? You might think, and this process will be much easier to lose weight in a healthy way to get over ... Now a much more difficult as it used to have a nice view, but you have to do is that you want to attenuation.

Disclaimer

This is a personal web site, produced in my own time and solely reflecting my personal opinions. Statements on this site do not represent the views or policies of my employer, past or present, or any other organisation with which I may be affiliated. The information on this site is provided for discussion purposes only, and are not investing recommendations. Under no circumstances does this information represent a recommendation to buy or sell securities.